In the years 2006 to 2007, one can easily obtain 100 percent financing. Today, one can still obtain 100 percent financing – but not on investment property. One hundred percent financing is still being offered, but only for first time home buyers, and that excludes investment properties. There’s also some misconceptions about 100 percent financing. A lot of people have this notion that getting 100 percent financing means you do not ever have to take out your checkbook. While this type of loan finance you in the purchase of a property, there are other costs that you may have to pay, such as closing costs on a house. If you’re looking to obtain 100 financing on investment properties, consider the following:
A seller who has no debt against a property, although rare to find but do exist, can finance the full amount of the property investment.
Wrap Around Mortgage
Also termed as wraparound loan, all-inclusive mortgage, or overriding mortgage, this type of loan is often used as a way to refinance property or finance the purchase of property even when an existing mortgage cannot be paid off. In a wraparound mortgage, the total loan amount includes the previous loan’s unpaid balance plus the new additional amount applied for by the borrower. Hence, the borrower makes payments to the new lender on the bigger loan, while the new lender makes payments on the loan originally borrowed.
Seller-Financed Second Mortgage
In a seller-financed second mortgage, a new first mortgage is obtained by the buyer a second mortgage is issued by the seller, in lieu of a down payment. This is best done privately between the buyer and seller because most lenders won’t issue the first mortgage if the second mortgage is done at closing.
Bond for Deed or Land Contract
In a bond for deed or land contract, the seller’s existing mortgage is assumed by the buyer. This works with properties mortgaged to the banks. Since the title to the property is not transferred to the buyer until the existing mortgage is satisfied, the banks can’t stop it.
Private Money Lenders
Private money lenders are people who have either lots of cash or a self-directed IRA who are willing to lend you funds in exchange for a portion of the ownership.
Self Directed IRAs
Another way to obtain 100 percent financing for investment property is through the use of IRAs, These assets can be placed into a custodial account, allowing you to purchase property where the owner would be the Self Directed IRA.